e-discovery 2.0

The long awaited order regarding the preservation of thousands of computer hard drives in Pippins v. KPMG was finally issued last week. In a sharply worded decision, the Pippins court overruled KPMG’s objections to the magistrate’s preservation order and denied its motion for protective order. The firm must now preserve the hard drives of certain former and departing employees unless it can reach an agreement with the plaintiffs on a methodology for sampling data from a select number of those hard drives.

Though easy to get caught up in the opinion’s rhetoric (“[i]t smacks of chutzpah (no definition required) to argue that the Magistrate failed to balance the costs and benefits of preservation . . .”), the Pippins case confirms the importance of both cooperation and proportionality in eDiscovery. With respect to cooperation, the court emphasized that parties should take reasonable positions in discovery so as to reach mutually agreeable results. The order also stressed the importance of communicating with the court to clarify discovery obligations.  In that regard, the court faulted the parties and the magistrate for not seeking the court’s clarification with respect to its prior order staying discovery. The court explained that the discovery stay – which KPMG had understood to prevent any sampling of the hard drives – could have been partially lifted to allow for sampling. And this, in turn, could have obviated the costs and delays associated with the motion practice on this matter.

Regarding proportionality, the court confirmed the importance of this doctrine in determining the scope of preservation. Indeed, the court declared that proportionality is typically “determinative” of a motion for protective order. Nevertheless, the court could not engage in a proportionality analysis – weighing the benefits of preserving the hard drives against its burdens – as the defendant had not yet produced any evidence from the hard drives to evaluate the nature of the evidence. Only after the evidence from a sampling of hard drives had been produced and evaluated could such a determination be made.

The Pippins case demonstrates that courts have raised their expectations for how litigants will engage in eDiscovery. Staking out unreasonable positions in the name of zealous advocacy stands in stark contrast to the clear trend that discovery should comply with the cost cutting mandate of Federal Rule 1. Cooperation and proportionality are two of the principal touchstones for effectuating that mandate.

It’s no surprise that the first industry to be heavily regulated regarding social media use was the financial services industry. The predominant factor that drove regulators to address the viral qualities of social media was the fiduciary nature of investing that accompanies securities, coupled with the potential detrimental financial impact these offerings could have on investors.

Although there is no explicit language in FINRA’s Regulatory Notices 10-06 (January 2010) or 11-30 (August 2011) requiring archival, the record keeping component of the notices necessitate social media archiving in most cases due to the sheer volume of data produced on social media sites. Melanie Kalemba, Vice President of Business Development at SocialWare in Austin, Texas states:

“Our clients in the financial industry have led the way, they have paved the road for other industries, making social media usage less daunting. Best practices for monitoring third-party content, record keeping responsibilities, and compliance programs are available and developed for other industries to learn from. The template is made.”

eDiscovery and Privacy Implications. Privacy laws are an important aspect of social media use that impact discoverability. Discovery and privacy represent layers of the Rubik’s cube in the ever-changing and complex social media environment. No longer are social media cases only personal injury suits or HR incidents, although those are plentiful. For example, in Largent v. Reed the court ruled that information posted by a party on their personal Facebook page was discoverable and ordered the plaintiff to provide user name and password to enable the production of the information. In granting the motion to compel the Defendant’s login credentials, Judge Walsh acknowledged that Facebook has privacy settings, and that users must take “affirmative steps” to keep their information private. However, his ruling determined that no social media privacy privilege exists: “No court has recognized such a privilege, and neither will we.” He further reiterated his ruling by adding, “[o]nly the uninitiated or foolish could believe that Facebook is an online lockbox of secrets.”

Then there are the new cases emerging over social media account ownership which affect privacy and discoverability. In the recently filed Phonedog v. Kravitz, 11-03474 (N.D. Cal.; Nov. 8, 2011), the lines between the “professional” versus the “private” user are becoming increasingly blurred. This case also raises questions about proprietary client lists, valuations on followers, and trade secrets  – all of which are further complicated when there is no social media policy in place. The financial services industry has been successful in implementing effective social media policies along with technology to comply with agency mandates – not only because they were forced to by regulation, but because they have developed best practices that essentially incorporate social media into their document retention policies and information governance infrastructures.

Regulatory Framework. Adding another Rubik’s layer are the multitude of regulatory and compliance issues that many industries face. The most active and vocal regulators for guidance in the US on social media have been FINRA, the SEC and the FTC. FINRA initiated guidance to the financial services industry, and earlier this month the SEC issued their alert. The SEC’s exam alert to registered investment advisers issued on January 4, 2012 was not meant to be a comprehensive summary for compliance related to the use of social media. Instead, it lays out staff observations of three major categories: third party content, record keeping and compliance – expounding on FINRA’s notice.

Last year the FTC issued an extremely well done Preliminary FTC Staff Report on Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers.  Three main components are central to the report. The first is a call for all companies to build privacy and security mechanisms into new products – considering the possible negative ramifications at the outset, avoiding social media and privacy issues as an afterthought. The FTC has cleverly coined the notion, “Privacy by Design.” Second, “Just-In-Time” is a concept about notice and encourages companies to communicate with the public in a simple way that prompts them to make informed decisions about their data in terms that are clear and that require an affirmative action (i.e., checking a box). Finally, the FTC calls for greater transparency around data collection, use and retention. The FTC asserts that consumers have a right to know what kind of data companies collect, and should have access to the sensitivity and intended use of that data. The FTC’s report is intended to inform policymakers, including Congress, as they legislate on privacy – and to motivate companies to self-regulate and develop best practices. 

David Shonka, Principal Deputy General Counsel at the FTC in Washington, D.C., warns, “There is a real tension between the situations where a company needs to collect data about a transaction versus the liabilities associated with keeping unneeded data due to privacy concerns. Generally, archiving everything is a mistake.” Shonka arguably reinforces the case for instituting an intelligent archive, whether a company is regulated or not;  an archive that is selective about what it ingests based on content, and that has an appropriate deletion cycle applied to defined data types/content according to a policy. This will ensure expiry of private consumer information in a timely manner, but retains the benefits of retrieval for a defined period if necessary.

The Non-Regulated Use Case­. When will comprehensive social media policies, retention and monitoring become more prevalent in the non-regulated sectors? In the case of FINRA and the SEC, regulations were issued to the financial industry. In the case of the FTC, guidance had been given to companies regarding how to avoid false advertisement and protect consumer privacy. The two are not dissimilar in effect. Both require a social media policy, monitoring, auditing, technology, and training. While there is no clear mandate to archive social media if you are in a non-regulated industry, this can’t be too far away. This is evidenced by companies that have already implemented social media monitoring systems for reasons like brand promotion/protection, or healthcare companies that deal with highly sensitive information. If social media is replacing email, and social media is essentially another form of electronic evidence, why would social media not be part of the integral document retention/expiry procedures within an organization?

Content-based monitoring and archiving is possible with technology available today, as the financial sector has demonstrated. Debbi Corej, who is a compliance expert for the financial sector and has successfully implemented an intensive social media program, says it perfectly: “How do you get to yes? Yes you can use social media, but in a compliant way.” The answer can be found at LegalTech New York – January 30 @ 2:00pm.

2012 is the Year of the Dragon – which is fitting, since no other Chinese Zodiac sign represents the promise, challenge, and evolution of predictive coding technology more than the Dragon.  The few who have embraced predictive coding technology exemplify symbolic traits of the Dragon that include being unafraid of challenges and willing to take risks.  In the legal profession, taking risks typically isn’t in a lawyer’s DNA, which might explain why predictive coding technology has seen lackluster adoption among lawyers despite the hype.  This blog explores the promise of predictive coding technology, why predictive coding has not been widely adopted in eDiscovery, and explains why 2012 is likely to be remembered as the year of predictive coding.

What is predictive coding?

Predictive coding refers to machine learning technology that can be used to automatically predict how documents should be classified based on limited human input.  In litigation, predictive coding technology can be used to rank and then “code” or “tag” electronic documents based on criteria such as “relevance” and “privilege” so organizations can reduce the amount of time and money spent on traditional page by page attorney document review during discovery.

Generally, the technology works by prioritizing the most important documents for review by ranking them.  In addition to helping attorneys find important documents faster, this prioritization and ranking of documents can even eliminate the need to review documents with the lowest rankings in certain situations. Additionally, since computers don’t get tired or day dream, many believe computers can even predict document relevance better than their human counterparts.

Why hasn’t predictive coding gone mainstream yet?

Given the promise of faster and less expensive document review, combined with higher accuracy rates, many are perplexed as to why predictive coding technology hasn’t been widely adopted in eDiscovery.  The answer really boils down to one simple concept – a lack of transparency.

Difficult to Use

First, early predictive coding tools attempt to apply a complicated new technological approach to a document review process that has traditionally been very simple.  Instead of relying on attorneys to read each and every document to determine relevance, the success of today’s predictive coding technology typically depends on review decisions input into a computer by one or more experienced senior attorneys.  The process commonly involves a complex series of steps that include sampling, testing, reviewing, and measuring results in order to fine tune an algorithm that will eventually be used to predict the relevancy of the remaining documents.

The problem with early predictive coding technologies is that the majority of these complex steps are done in a ‘black box’.  In other words, the methodology and results are not always clear, which increases the risk of human error and makes the integrity of the electronic discovery process difficult to defend.  For example, the methodology for selecting a statistically relevant sample is not always intuitive to the end user.  This fundamental problem could result in improper sampling techniques that could taint the accuracy of the entire process.  Similarly, the process must often be repeated several times in order to improve accuracy rates.  Even if accuracy is improved, it may be difficult or impossible to explain how accuracy thresholds were determined or to explain why coding decisions were applied to some documents and not others.

Accuracy Concerns

Early predictive coding tools also tend to lack transparency in the way the technology evaluates the language contained in each document.  Instead of evaluating both the text and metadata fields within a document, some technologies actually ignore document metadata.  This omission means a privileged email sent by a client to her attorney, Larry Lawyer, might be overlooked by the computer if the name “Larry Lawyer” is only part of the “recipient” metadata field of the document and isn’t part of the document text.  The obvious risk is that this situation could lead to privilege waiver if it is inadvertently produced to the opposing party.

Another practical concern is that some technologies do not allow reviewers to make a distinction between relevant and non-relevant language contained within individual documents.  For example, early predictive coding technologies are not intelligent enough to know that only the second paragraph on page 95 of a 100-page document contains relevant language.  The inability to discern what language  led to the determination that the document is relevant could skew results when the computer tries to identify other documents with the same characteristics.  This lack of precision increases the likelihood that the computer will retrieve an over-inclusive number of irrelevant documents.  This problem is generally referred to as ‘excessive recall,’ and it is important because this lack of precision increases the number of documents requiring manual review which directly impacts eDiscovery cost.

Waiver & Defensibility

Perhaps the biggest concern with early predictive coding technology is the risk of waiver and concerns about defensibility.  Notably, there have been no known judicial decisions that specifically address the defensibility of these new technology tools even though some in the judiciary, including U.S. Magistrate Judge Andrew Peck, have opined that this kind of technology should be used in certain cases.

The problem is that today’s predictive coding tools are difficult to use, complicated for the average attorney, and the way they work simply isn’t transparent.  All these limitations increase the risk of human error.  Introducing human error increases the risk of overlooking important documents or unwittingly producing privileged documents.  Similarly, it is difficult to defend a technological process that isn’t always clear in an era where many lawyers are still uncomfortable with keyword searches.  In short, using black box technology that is difficult to use and understand is perceived as risky, and many attorneys have taken a wait-and-see approach because they are unwilling to be the guinea pig.

Why is 2012 likely to be the year of predictive coding?

The word transparency may seem like a vague term, but it is the critical element missing from today’s predictive coding technology offerings.  2012 is likely to be the year of predictive coding because improvements in transparency will shine a light into the black box of predictive coding technology that hasn’t existed until now.  In simple terms, increasing transparency will simplify the user experience and improve accuracy which will reduce longstanding concerns about defensibility and privilege waiver.

Ease of Use

First, transparent predictive coding technology will help minimize the risk of human error by incorporating an intuitive user interface into a complicated solution.  New interfaces will include easy-to-use workflow management consoles to guide the reviewer through a step-by-step process for selecting, reviewing, and testing data samples in a way that minimizes guesswork and confusion.  By automating the sampling and testing process, the risk of human error can be minimized which decreases the risk of waiver or discovery sanctions that could result if documents are improperly coded.  Similarly, automated reporting capabilities make it easier for producing parties to evaluate and understand how key decisions were made throughout the process, thereby making it easier for them to defend the reasonableness of their approach.

Intuitive reports also help the producing party measure and evaluate confidence levels throughout the testing process until appropriate confidence levels are achieved.  Since confidence levels can actually be measured as a percentage, attorneys and judges are in a position to negotiate and debate the desired level of confidence for a production set rather than relying exclusively on the representations or decisions of a single party.  This added transparency allows the type of cooperation between parties called for in the Sedona Cooperation Proclamation and gives judges an objective tool for evaluating each party’s behavior.

Accuracy & Efficiency

2012 is also likely to be the year of transparent predictive coding technology because technical limitations that have impacted the accuracy and efficiency of earlier tools will be addressed.  For example, new technology will analyze both document text and metadata to avoid the risk that responsive or privileged documents are overlooked.  Similarly, smart tagging features will enable reviewers to highlight specific language in documents to determine a document’s relevance or non-relevance so that coding predictions will be more accurate and fewer non-relevant documents will be recalled for review.

Conclusion - Transparency Provides Defensibility

The bottom line is that predictive coding technology has not enjoyed widespread adoption in the eDiscovery process due to concerns about simplicity and accuracy that breed larger concerns about defensibility.  Defending the use of black box technology that is difficult to use and understand is a risk that many attorneys simply are not willing to take, and these concerns have deterred widespread adoption of early predictive coding technology tools.  In 2012, next generation transparent predictive coding technology will usher in a new era of computer-assisted document review that is easy to use, more accurate, and easier to defend. Given these exciting technological advancements, I predict that 2012 will not only be the year of the dragon, it will also be the year of predictive coding.

It’s already a few weeks into the new year and it’s easy to spot the big lines at the gym, folks working on fad diets and many swearing off any number of vices.  Sadly perhaps, most popular resolutions don’t even really change year after year.  In the corporate world, though, it’s not good enough to simply recycle resolutions every year since there’s a lot more at stake, often with employee’s bonuses and jobs hanging in the balance.

It’s not too late to make information governance part of the corporate 2012 resolution list.  The reason is pretty simple – most companies need to get out of the reactive firefighting of eDiscovery given the risks of sloppy work, inadvertent productions and looming sanctions.  Yet, so many are caught up in the fog of eDiscovery war that they’ve failed to see the nexus between the upstream, proactive good data management hygiene and the downstream eDiscovery chaos.

In many cases the root cause is the disconnect between differing functional groups (Legal, IT, Information Security, Records Management, etc.).  This is where the emerging umbrella concept of Information Governance comes to play, serving as a way to tackle these information risks along a unified front. Gartner defines information governanceas the:

“specification of decision rights, and an accountability framework to encourage desirable behavior in the valuation, creation, storage, use, archiving and deletion of information, … [including] the processes, roles, standards, and metrics that ensure the effective and efficient use of information to enable an organization to achieve its goals.”

Perhaps more simply put, what were once a number of distinct disciplines—records management, data privacy, information security and eDiscovery—are rapidly coming together in ways that are important to those concerned with mitigating and managing information risk. This new information governance landscape is comprised of a number of formerly discrete categories:

• Regulatory Risks – Whether an organization is in a heavily regulated vertical or not, there are a host of regulations that an organization must navigate to successfully stay in compliance.  In the United States these include a range of disparate regimes, including the Sarbanes-Oxley Act, HIPPA, the Securities and Exchange Act, the Foreign Corrupt Practices Act (FCPA) and other specialized regulations – any number of which require information to be kept in a prescribed fashion, for specified periods of time.  Failure to turn over information when requested by regulators can have dramatic financial consequences, as well as negative impacts to an organization’s reputation.

• Discovery Risks – Under the discovery realm there are any number of potential risks as a company moves along the EDRM spectrum (i.e., Identification, Preservation, Collection, Processing, Analysis, Review and Production), but the most lethal risk is typically associated with spoliation sanctions that arise from the failure to adequately preserve electronically stored information (ESI).  There have been literally hundreds of cases where both plaintiffs and defendants have been caught in the judicial crosshairs, resulting in penalties ranging from outright case dismissal to monetary sanctions in the millions of dollars, simply for failing to preserve data properly.  It is in this discovery arena that the failure to dispose of corporate information, where possible, rears its ugly head since the eDiscovery burden is commensurate with the amount of data that needs to be preserved, processed and reviewed.  Some statistics show that it can cost as much as $5 per document just to have an attorney privilege review performed.  And, with every gigabyte containing upwards of 75,000 pages, it is easy to see massive discovery liability when an organization has terabytes and even petabytes of extraneous data lying around.

• Privacy Risks – Even though the US has a relatively lax information privacy climate there are any number of laws that require companies to notify customers if their personally identifiable information (PII) such as credit card, social security, or credit numbers have been compromised.  For example, California’s data breach notification law (SB1386) mandates that all subject companies must provide notification if there is a security breach to the electronic database containing PII of any California resident.  It is easy to see how unmanaged PII can increase corporate risk, especially as data moves beyond US borders to the international stage where privacy regimes are much more staunch.

• Information Security Risks – Data breaches have become so commonplace that the loss/theft of intellectual property has become an issue for every company, small and large, both domestically and internationally.  The cost to businesses of unintentionally exposing corporate information climbed 7 percent last year to over $7 million per incident.  Recently senators asked the SEC to “issue guidance regarding disclosure of information security risk, including material network breaches” since “securities law obligates the disclosure of any material network breach, including breaches involving sensitive corporate information that could be used by an adversary to gain competitive advantage in the marketplace, affect corporate earnings, and potentially reduce market share.”  The senators cited a 2009 survey that concluded that 38% of Fortune 500 companies made a “significant oversight” by not mentioning data security exposures in their public filings.

Information governance as an umbrella concept helps organizations to create better alignment between functional groups as they attempt to solve these complex and interrelated data risk challenges.  This coordination is even more critical given the way that corporate data is proliferating and migrating beyond the firewall.  With even more data located in the cloud and on mobile devices a key mandate is managing data in all types of form factors. A great first step is to determine ownership of a consolidated information governance approach where the owner can:

• Get C-Level buy-in
• Have the organizational savvy to obtain budget
• Be able to define “reasonable” information governance efforts, which requires both legal and IT input
• Have strong leadership and consensus building skills, because all stakeholders need to be on the same page
• Understand the nuances of their business, since an overly rigid process will cause employees to work around the policies and procedures

Next, tap into and then leverage IT or information security budgets for archiving, compliance and storage.  In most progressive organizations there are likely ongoing projects that can be successfully massaged into a larger information governance play.  A great place to focus on initially is information archiving, since this one of the simplest steps an organization can take to improve their information governance hygiene.  With an archive organizations can systematically index, classify and retain information and thus establish a proactive approach to data management.  It’s this ability to apply retention and (most importantly) expiration policies that allows organizations to start reducing the upstream data deluge that will inevitably impact downstream eDiscovery processes.

Once an archive is in place, the next logical step is to couple a scalable, reactive eDiscovery process with the upstream data sources, which will axiomatically include email, but increasingly should encompass cloud content, social media, unstructured data, etc.  It is important to make sure  that a given  archive has been tested to ensure compatibility with the chosen eDiscovery application to guarantee that it can collect content at scale in the same manner used to collect from other data sources.  Overlaying both of these foundational pieces should be the ability to place content on legal hold, whether that content exists in the archive or not.

As we enter 2012, there is no doubt that information governance should be an element in building an enterprise’s information architecture.  And, different from fleeting weight loss resolutions, savvy organizations should vow to get ahead of the burgeoning categories of information risk by fully embracing their commitment to integrated information governance.  And yet, this resolution doesn’t need to encompass every possible element of information governance.  Instead, it’s best to put foundational pieces into place and then build the rest of the infrastructure in methodical and modular fashion.

As 2011 comes quickly to a close we’ve attempted, as in years past, to do our best Carnac impersonation and divine the future of eDiscovery.  Some of these predictions may happen more quickly than others, but it’s our sense that all will come to pass in the near future – it’s just a matter of timing.

1. Technology Assisted Review (TAR) Gains Speed.  The area of Technology Assisted Review is very exciting since there are a host of emerging technologies that can help make the review process more efficient, ranging from email threading, concept search, clustering, predictive coding and the like.  There are two fundamental challenges however.  First, the technology doesn’t work in a vacuum, meaning that the workflows need to be properly designed and the users need to make accurate decisions because those judgment calls often are then magnified by the application.  Next, the defensibility of the given approach needs to be well vetted.  While it’s likely not necessary (or practical) to expect a judge to mandate the use of a specific technological approach, it is important for the applied technologies to be reasonable, transparent and auditable since the worst possible outcome would be to have a technology challenged and then find the producing party unable to adequately explain their methodology.
2. The Custodian-Based Collection Model Comes Under Stress. Ever since the days of Zubulake, litigants have focused on “key players” as a proxy for finding relevant information during the eDiscovery process.  Early on, this model worked particularly well in an email-centric environment.  But, as discovery from cloud sources, collaborative worksites (like SharePoint) and other unstructured data repositories continues to become increasingly mainstream, the custodian-oriented collection model will become rapidly outmoded because it will fail to take into account topically-oriented searches.  This trend will be further amplified by the bench’s increasing distrust of manual, custodian-based data collection practices and the presence of better automated search methods, which are particularly valuable for certain types of litigation (e.g., patent disputes, product liability cases).
3. The FRCP Amendment Debate Will Rage On – Unfortunately Without Much Near Term Progress. While it is clear that the eDiscovery preservation duty has become a more complex and risk laden process, it’s not clear that this “pain” is causally related to the FRCP.  In the notes from the Dallas mini-conference, a pending Sedona survey was quoted referencing the fact that preservation challenges were increasing dramatically.  Yet, there isn’t a consensus viewpoint regarding which changes, if any, would help improve the murky problem.  In the near term this means that organizations with significant preservation pains will need to better utilize the rules that are on the books and deploy enabling technologies where possible.
4. Data Hoarding Increasingly Goes Out of Fashion. The war cry of many IT professionals that “storage is cheap” is starting to fall on deaf ears.  Organizations are realizing that the cost of storing information is just the tip of the iceberg when it comes to the litigation risk of having terabytes (and conceivably petabytes) of unstructured, uncategorized and unmanaged electronically stored information (ESI).  This tsunami of information will increasingly become an information liability for organizations that have never deleted a byte of information.  In 2012, more corporations will see the need to clean out their digital houses and will realize that such cleansing (where permitted) is a best practice moving forward.  This applies with equal force to the US government, which has recently mandated such an effort at President Obama’s behest.
5. Information Governance Becomes a Viable Reality.  For several years there’s been an effort to combine the reactive (far right) side of the EDRM with the logically connected proactive (far left) side of the EDRM.  But now, a number of surveys have linked good information governance hygiene with better response times to eDiscovery requests and governmental inquires, as well as a corresponding lower chance of being sanctioned and the ability to turn over less responsive information.  In 2012, enterprises will realize that the litigation use case is just one way to leverage archival and eDiscovery tools, further accelerating adoption.
6. Backup Tapes Will Be Increasingly Seen as a Liability.  Using backup tapes for disaster recovery/business continuity purposes remains a viable business strategy, although backing up to tape will become less prevalent as cloud backup increases.  However, if tapes are kept around longer than necessary (days versus months) then they become a ticking time bomb when a litigation or inquiry event crops up.
7. International eDiscovery/eDisclosure Processes Will Continue to Mature. It’s easy to think of the US as dominating the eDiscovery landscape. While this is gospel for us here in the States, international markets are developing quickly and in many ways are ahead of the US, particularly with regulatory compliance-driven use cases, like the UK Bribery Act 2010.  This fact, coupled with the menagerie of international privacy laws, means we’ll be less Balkanized in our eDiscovery efforts moving forward since we do really need to be thinking and practicing globally.
8. Email Becomes “So 2009” As Social Media Gains Traction. While email has been the eDiscovery darling for the past decade, it’s getting a little long in the tooth.  In the next year, new types of ESI (social media, structured data, loose files, cloud context, mobile device messages, etc.) will cause headaches for a number of enterprises that have been overly email-centric.  Already in 2011, organizations are finding that other sources of ESI like documents/files and structured data are rivaling email in importance for eDiscovery requests, and this trend shows no signs of abating, particularly for regulated industries. This heterogeneous mix of ESI will certainly result in challenges for many companies, with some unlucky ones getting sanctioned because they ignored these emerging data types.
9. Cost Shifting Will Become More Prevalent – Impacting the “American Rule.” For ages, the American Rule held that producing parties had to pay for their production costs, with a few narrow exceptions.  Next year we’ll see even more courts award winning parties their eDiscovery costs under 28 U.S.C. §1920(4) and Rule 54(d)(1) FRCP. Courts are now beginning to consider the services of an eDiscovery vendor as “the 21st Century equivalent of making copies.”
10. Risk Assessment Becomes a Critical Component of eDiscovery. Managing risk is a foundational underpinning for litigators generally, but its role in eDiscovery has been a bit obscure.  Now, with the tremendous statistical insights that are made possible by enabling software technologies, it will become increasingly important for counsel to manage risk by deciding what types of error/precision rates are possible.  This risk analysis is particularly critical for conducting any variety of technology assisted review process since precision, recall and f-measure statistics all require a delicate balance of risk and reward.

In their latest survey, entitled “E-Discovery Market Trends: A View from the Legal Department,” Enterprise Strategy Group (ESG) analysts Brian Babineau and Katey Wood analyze a number of interesting statistics and provide a range of insightful conclusions.  By surveying general counsel from large, mid-market (500-999 employees) and enterprise-class organizations in North America they were able to dive into a range of eDiscovery topics, including pain points, operational expenses and prioritizations on a go-forward basis.  Some are more intuitive than others, but in either case the results serve as good calibration metrics for those who endeavor to understand the corporate eDiscovery state of the nation.

“Most corporations are not tracking e-discovery spending…” In what may be the most notable finding of this ESG report, 60% of survey respondents claim that they did not track annual eDiscovery spending in 2010.  The authors correctly note that the eDiscovery process, “which can be highly unpredictable due to its project-by-project nature to begin with, has historically been outsourced to service providers charging at variable rates and often billed back to companies via their law firms.”  Despite the significant challenges of tracking eDiscovery spending, it’s nevertheless irresponsible for organizations to keep their heads in the sand regarding such a significant operational expense.

As the old saw goes, “you can’t manage what you can’t measure,” so it’s almost inconceivable to think that so many organizations aren’t tracking such a significant expense category.  For organizations who want to create a repeatable business process, as opposed to the fire-drill chaos that is typically associated with eDiscovery, it’s vitally important to accurately capture core eDiscovery metrics.  For starters, it’s useful to understand basic collection parameters, such as of the typical numbers of key custodians, average data volumes per custodian, data expansion rates, de-duplication statistics, etc.  Once these metrics are in place, it then becomes possible to manage the process and reduce costs.

Katey went on to expound in an exclusive quote for EDD 2.0:

“E-discovery can be managed as a strategic business process with an understanding of costs, performance and outcomes. When there’s no basis for reporting or comparison, it’s pin the tail on the donkey.  Corporate litigants won’t ever know they’re getting their money’s worth if they don’t even know what they’re spending.”

“E-Discovery accuracy/efficiency isn’t being measured, in large part.” Similar to the failure to measure eDiscovery costs, a full two thirds of GCs (67%) aren’t tracking the “efficiency and/or accuracy of e-discovery document review.” Until corporate counsel can link expectations of competency/efficiency with oversight and performance metrics, outside law firms will likely avoid having their feet held to the fire.  This passive stance makes transparency and process improvement difficult at best.  Additionally, this model of having expectations for efficiency, with low or no accountability, doesn’t bode well for the quick adoption of enabling technologies like predictive coding, since the driver has to inherently be the need/desire for increased efficiency (which axiomatically equals lower law firm review bills).

“Corporate information governance and litigation readiness (especially defensible deletion) are a priority, but not yet a reality.” From an internal prioritization perspective, more than two thirds (69%) of respondents identified their desire to expire/delete data more consistently, “thereby limiting unnecessary data retention for future litigation requests.”  Savvy enterprises correctly recognized the “multi-prong threat of unregulated data retention: the large amounts of irrelevant data ultimately produced for legal review, the greater difficulty of hanging onto potentially litigious documents past their required retention periods.”

This finding is very encouraging, and it ties into the upward momentum the industry is seeing regarding information governance generally – particularly linking the reactive (right) side of the EDRM with the logically connected and proactive (left) side of the EDRM.  As a good first step it’s critical to see organizations now associating good information governance hygiene with lower costs and better eDiscovery response times.  The ESG finding also triangulates with results from the recent Information Retention and eDiscovery Survey, which found that companies having good information governance hygiene were often able to respond much faster and more successfully to an eDiscovery/investigation requests, often suffering fewer negative consequences.

The only downside to the positive information governance trend, as reported by the survey, was that,

“while there are great benefits to defensible deletion, internal initiatives for implementing it too often are stymied by difficulty in obtaining cross functional consensus and authorization, particularly as it touches so many other critical processes like regulatory compliance and legal hold.”

“Legal hold processes are still very manual.” Another similar question revealed that many companies are attempting to get their information governance house in order, but are still in the very early stages.  When asked about their  current legal hold notification and tracking process, a whopping 69% of organizations said that they are using a “manual process performed by internal staff using e-mail and spreadsheets, etc.”  And, another 6% said they either had no formal process or tracking mechanism.

Given the risks attendant to flaws in the preservation process this area is ripe for improvement.  The good news is that 54% of survey respondents are intending to improve their legal hold process, with 25% planning improvement within the next 12 months.  This is a healthy acknowledgement that there is risk, and with a modicum of investment (time, personnel, procedures, and technology) the legal hold area can be brought up to current best practices.

The ESG survey is a welcome temperature gauge into the state of corporate legal departments.  It notes, in conclusion, “with the staggering growth, diversity and dispersion of data, the pain e-discovery is currently causing large and serial litigants are only a symptom of the larger problem of unwieldy and under-developed information management affecting all businesses.”  With data insights from the ESG survey, it’s becoming clear that foundational information governance elements (like deploying auditable legal hold procedures, tracking eDiscovery spending, updating data maps, etc.) are desperately needed by the many organizations that want to turn eDiscovery into a repeatable business process.  The good news is that many of these organization have improvements in mind for the next 12 months, and the challenge will be to make sure these proactive projects maintain the same level of organizational urgency that it often present for more reactive tasks.

Google has publicly released the number of U.S. Government requests it had for email productions in the six months preceding December 31, 2009.  They have had to comply with 94% of these 4,601 requests.  Granted, many of these requests were search warrants or subpoenas, but many were not.  Now take 4,601 and multiply it by at least 3 for other social media sources for Facebook, LinkedIn, and Twitter.  The number is big – and so is the concern over how this information is being obtained.

What has becoming increasingly common (and alarming at the same time) is the way this electronically stored information (ESI) is being obtained from third party service providers by the U.S. Government. Some of these requests were actually secret court orders; it is unclear how many of the matters were criminal or civil.  Many of these service providers (Sonic, Google, Microsoft, etc.) are challenging these requests and most often losing. They are losing on two fronts:  1) they are not allowed to inform the data owner about the requests, nor the subsequent production of the emails, and 2) they are forced to actually produce the information.  For example, the U.S. Government obtained one of these secret orders to get WikiLeaks volunteer Jacob Applebaum’s email contact list of the people he has corresponded with over the past two years.  Both Google and Sonic.net were ordered to turn over information and Sonic challenged  the order and lost.  This has forced technology companies to band together to lobby Congress to require search warrants in digital investigations.

There are three primary laws operating at this pivotal intersection that affect the discovery of ESI that resides with third party service providers, and these laws are in a car wreck with no ambulance in sight.  First, there is the antiquated Federal Law, the Electronic Communications Privacy Act of 1986, over which there is much debate at present.  To put the datedness of the ECPA in perspective, it was written before the internet.  This law is the basis that allows the government to secretly obtain information from email and cell phones without a search warrant. Not having a search warrant is in direct conflict with the U.S. Constitution’s 4th Amendment protection against unreasonable searches and seizures.  In the secret order scenario, the creator of data is denied their right to know about the search and seizure (as they would if their homes were being searched, for example) as it is transpiring with the third party.

Where a secret order has been issued and emails have been obtained from a third party service provider, we see the courts treating email much differently than traditional mail and telephone lines.  However, the intent of the law was to give electronic communications the same protections that mail and phone calls have enjoyed for some time. Understandably, the law did not anticipate the advent of the technology we have today.  This is the first collision, and the reason the wheels have gone off the car, since the standard under the ECPA sets a lower bar for email than that of the former two modes of communication.  The government must only show “reasonable grounds” that the records would be “relevant and material” to an investigation, criminal or civil, compared to the other higher standard.

The third law in this collision is the Freedom of Information Act (FOIA).  While certain exceptions and allowances are made for national security and in criminal investigations, these secret orders are not able to be seen by the person whose information has been requested.  Additionally, the public wants to see these requests and these orders, especially if they have no chance of fighting them.  What remains to be seen is what our rights are under FOIA to see these orders, either as a party or a non-related individual to the investigation as a matter of public record.  U.S. Senator Patrick Leahy, (D-VT), the author of the ECPA, acknowledged in no uncertain terms that the law is “significantly outdated and outpaced by rapid changes in technology.”   He has since introduced a bill with many changes that third party service providers have lobbied for to bring the ECPA up to date. The irony of this situation is that the law was intended to provide the same protections for all modes of communication, but in fact makes it easier for the government to request information without the author even knowing.

This is one of the most important issues now facing individuals and the government in the discovery of ESI during investigations and litigation.  A third party service provider of cloud offerings is really no different than a utility company, and the same paradigm can exist as it does with the U.S. Postal Service and the telephone companies when looking to discover this information under the Fourth Amendment, where a warrant is required. The law looks to be changing to reflect this and FOIA should allow the public to access these orders.  Amendments to the Act have been introduced by Senator Leahy, and we can look forward to the common sense changes he proposes that are necessary.  The American people don’t like secrets. Lawyers, get ready to embrace the revisions into your practice by reading up on the changes as they will impact your practices significantly in the near future.

We’ve all heard the phrase that “everything is bigger in Texas” and the little “mini-conference” held in Dallas, TX last Friday was no exception.  The Discovery Subcommittee held a small, one-day conference to tackle some big issues related to preservation and sanctions that could ultimately lead to amendments to the Federal Rules of Civil Procedure (Rules).

The Subcommittee’s primary purpose was to discuss “preservation and sanctions issues” by using the following topics as guidelines:

• The nature and scope of the current “problem”
• The role of technology
• Possible solutions to the problem

Counsel from large companies like Google, General Electric, and Exxon Mobil participated side by side with outside counsel from both plaintiffs’ and defense bar to discuss what some characterized as a lack of clear direction in the current Rules.  Government lawyers, academics, and federal judges including Judges David Campbell (D. Az.), Shira Scheindlin (S.D.N.Y.), Paul Grimm (D. Md.), John Facciola (D.D.C.), Lee Rosenthal (S.D. Tx.), Michael Mosman (D. Ore.), and Nan Nolan (N. D. Ill.) helped round out the field to make for a lively discussion with multiple perspectives represented.  The following summary highlights some of the key viewpoints and areas of contention debated throughout the day.[1]

The nature and scope of the problem

An underlying theme throughout the day was whether or not preservation and sanctions challenges warrant amending the Rules.  Not surprisingly, counsel for large organizations that commonly bear the brunt of large and frequent document requests lobbied for rule amendments that provide more certainty around when the duty to preserve evidence is triggered, the scope of that duty, and how sanctions are applied.

In support of this position, some corporate attorneys argued that the lack of certainty in the current Rules unfairly requires organizations to err on the side of preserving evidence early and broadly to avoid the risk of sanctions.  Since preserving evidence can be extremely expensive and the duty may be triggered before litigation even begins, they argue that changes to the Rules are necessary.  One corporate attorney framed the issue by providing specific details about costs associated with preserving data for different cases.  He explained that in one situation, his organization has spent more than $5 million to locate, collect, preserve, and maintain data for an ongoing matter even though a complaint has never been filed.  He went on to explain the dilemma by stating: “not preserving asks us to take a chance with our reputation.”

In response, a few attendees questioned how preservation related expenses could spiral so high even before attorney review.  Others pointed out that if the current Rules were better utilized, specifically the meet-and-confer provisions of Rule 26(f), then many preservation challenges could be minimized.  Supporters of better Rule 26(f) engagement complained that counsel for large organizations often refuse to discuss preservation related issues and thereby fuel problems related to the scope of preservation themselves.   Others suggested that if organizations enforced better information management policies instead of keeping “everything forever”, then the magnitude of the problem could be reduced.

Technology

The Subcommittee members generally agreed that the evolution of technology has led to massive data growth which creates new electronic data challenges.  Electronically stored information (ESI) is often duplicative, typically resides in many different technology systems, and can be difficult to locate on a case by case basis.  There was some thoughtful discussion about how data archiving and cloud computing technology are important tools for helping organizations manage these information problems more effectively.  Another commentator acknowledged that although “predictive coding” may be helpful for “reviewing” data, it requires significant human involvement and simply does not solve the problem at hand.

Surprisingly, aside from the comments above, the technology discussion focused mainly on the issue of what constitutes “possession, custody or control” under Rule 34 in today’s environment of social media, cloud computing, and mobile devices.  Unfortunately, there was no discussion of either the role legal technology solutions play in minimizing risk and cost or of the impact the current Rules have on public policy.  For example, the Subcommittee did not address whether organizations that invest in technology in order to automate their internal data management and electronic discovery process should be afforded more protection under Rule 26(b)(2)(B) (“not reasonably accessible because of undue burden or cost”) than organizations that choose not to invest in technology.  If an organization’s technology investment (or lack thereof) is not a factor, does Rule 26(b)(2)(B) have the unintended effect of stifling meaningful legal technology investment by some organizations?  Similarly, do advancements in legal technology diminish the need for a Rule amendment that, at its core, is geared toward reducing costs?  In my opinion, the manner in which organizations are using technology today is an important factor that warrants deeper discussion and a subject I intend to address in a future publication soon.  Stay tuned.

Possible solutions

Discussion about possible solutions to the problem revealed more about the contrasting viewpoints in the room.  Notably, the Department of Justice representatives and those typically aligned with the plaintiffs’ bar tended to lobby for better adherence to the framework contained in the existing Rules in lieu of drafting new Rules.  These folks generally appeared to fall into the “No New Rule” or “Not Yet” camp, and cited the relative newness of the 2006 Rule Amendments and the fact that only about one percent of federal cases involve sanctions in support of their position that Rule amendments are premature or not needed.  Along the same lines, many called for further study and evaluation of the issues through organizations such as The Sedona Conference and the 7th Circuit Electronic Discovery Pilot Program.  Others referenced the importance of looking to evolving case law for more guidance before moving forward with Rule amendments.

In stark contrast, those on the other side of the aisle that typically represent large organizations, lobbied for bright line rules or at least “guideposts” to provide more certainty regarding preservation.  For example, one participant suggested that the duty to preserve evidence should begin when a complaint is served.  Another suggested that the duty should be triggered when a potential litigant is “reasonably certain to be a party to litigation” – a standard that is arguably narrower than the commonly applied “reasonably anticipates litigation” standard articulated in Judge Scheindlin’s frequently cited Zubulake v. UBS Warburg line of decisions.

Those calling for more certainty regarding triggering events also provided recommendations for addressing the scope of the preservation duty and the application of sanctions.  A suggestion to incorporate language that presumptively limits the number of custodians (10) and documents (by age) met resistance on the grounds that trying to apply a one-size-fits-all rule fails to acknowledge that the facts and circumstances of every case are different and so too are the litigants.  Similarly, recommendations to limit sanctions for evidence spoliation to situations where a litigant’s conduct is “intentional” or “willful” were met with a chilly reception by those favoring better adherence to the current Rules.

Conclusion

Time did not permit comprehensive discussion and analysis of every perspective, but the mini-conference highlighted the complexity surrounding preservation and sanctions issues and revealed some polarized viewpoints about how to solve those issues.  Perhaps one glimmer of consensus was the acknowledgement that “pre-litigation” obligations to preserve evidence before service of a complaint is often challenging for large organizations.  However, whether this and other issues should be addressed through better education, more stringent enforcement of existing rules, or by modifying the existing rules to include more “guideposts” remains unsettled.

What do you think?  Please respond to the poll, above right, to let us know whether you think amending the Federal Rules of Civil Procedure (FRCP) is necessary to address some of the preservation and sanctions issues discussed above.

To join the conversation and receive automatic updates when new information is posted to this blog, please subscribe to e-discovery 2.0.

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[1] A more exhaustive list of participants and sample questions was incorporated into the Federal Rules Advisory Committee’s June 29, 2011 memorandum announcing the mini-conference.  Similarly, the events leading up to the mini-conference are described in more detail as part of my previous postings on the same subject.

In my last post I announced that discussions are taking place that could change the way preservation and sanctions issues are handled within the federal court system.  The next round of discussions about possible amendments to the Federal Rules of Civil Procedure (FRCP) is scheduled to take place on September 9th in Dallas, Texas as part of a “mini-conference” led by the Discovery Subcommittee – a committee appointed by the Advisory Committee on Civil Rules.  This post discusses three different rule amendment approaches that attendees have been asked to consider in order to help them prepare for the mini-conference.  A complete list of attendees, preparation materials, and questions the group will consider are included in the Advisory Committee’s June 29, 2011 memorandum to the participants.

The debate about whether or not rule amendments are even required is far from over.  A 452-page document located on the U.S. Courts’ website chronicles many of the meetings, notes, and submissions driving the current discussion.  Page 265 of the document contains a memorandum prepared by the Civil Rules Advisory Committee earlier this year, stating that:

“the Subcommittee has reached no conclusion on whether rule amendments would be a productive way of dealing with preservation/sanctions concerns, much less what amendment proposals would be useful.”

Despite concerns that amending the current rules now would amount to jumping the gun, there is an undeniable desire for more clarity around when the duty to preserve electronically stored information (ESI) is triggered, what must be preserved, and when the duty expires.  This momentum has resulted in the crafting of draft proposals that are likely to help frame the discussion on September 9th. The “proposals” are really draft approaches that have been broken down into three general categories described in the Civil Rules Advisory Committee’s memorandum, titled: “PRESERVATION/SANCTIONS ISSUES” (see page 263).  The Category 1 approach can best be described as providing a higher degree of specificity than the other approaches.  For example, the Category 1 approach provides a fairly detailed explanation of the duty to preserve evidence (Rule 26.1(a)) and details possible triggers (26.1(b)), the scope of the duty to preserve (26.1(c)), and sanctions (Rule 37).  Category 2 proposes a more general preservation rule, while Category 3 only addresses sanctions as a tool for influencing behavior.  The three categories are discussed in more detail below.

Category 1: Specific Rule

This draft includes many different exemplary lists, alternative approaches, and footnotes that highlight the fact that one of the key challenges with drafting a specific rule is trying to foresee all of the challenges that might lie in the road ahead.  For example, the draft rule provides a long list of events that could trigger the duty to preserve evidence, including everything from serving a pleading to taking “any other action” in anticipation of litigation.   The rule also provides a list of information types that are “presumptively excluded” from the preservation duty, such as deleted data on hard drives, temporary internet files, and physically damaged media.

The lists are helpful in that they provide guidance.  However, each list also includes a “catch-all” provision to address scenarios that might not be foreseeable.  The inclusion of catch-all provisions highlights the inherent challenge of providing more clarity and certainty without creating rules that are so inflexible that they are difficult to apply to unforeseen factual scenarios or technological developments.  Some might argue that trying to provide a laundry list of examples will make passage of new rules difficult because each item on the list will stir debate.  Others contend that the lists add little value because the catch-all provisions will still require litigators to pass the sniff test of “reasonableness.”

Despite the inherent challenges related to drafting rules with specificity, most practitioners would likely support the inclusion of lists or examples that provide at least some direction.  What is likely to be far more controversial with respect to Category 1 is the use of alternative language proposing fixed limits around custodians and litigation holds.  For example, one alternative would limit data preservation requirements to a fixed number of custodians and the duty to preserve evidence would similarly expire after a fixed number of years.  Bright line rules like these may be easier to understand, but they also tend to be controversial since they lack the flexibility necessary to fairly address every conceivable situation.

Category 2: General Rule

Like the Category 1 proposal, the Category 2 proposal uses lists and outlines several alternative approaches throughout the rule.  However, the Category 2 proposal fundamentally differs from Category 1 by outlining a more general approach.  For example, one of the alternatives essentially states that the duty to preserve evidence is triggered whenever a “reasonable person” would expect to be a party to an action.  Similarly, the ongoing duty to preserve information after the duty has been triggered would be evaluated based on what is described as a “reasonable period” under the circumstances.

The beauty of this more general approach lies in its simplicity and flexibility.  The idea is that evaluating conduct based on the “reasonableness” of a person’s actions is much easier than attempting to draft bright line legal guidelines that account for every possible factual scenario.  The flip side is that reasonable minds could differ and results could be inconsistent if there are no bright line rules.  What this means in the context of the federal rule discussion is that one judge might find a party’s conduct with respect to data preservation efforts reasonable, while another judge might issue sanctions based on the same set of facts.  In large part, it is this lack of certainty and guidance in the current rules that sparked the current debate in the first place.

Category 3: Sanctions-Based Rule

Unlike the first two categories, the Category 3 approach focuses only on sanctions and would act like more of a “back-end” rule.  In other words, the rule would not contain any specific directives about preservation, but it would provide direction in the areas of when and how sanctions might be applied.

Despite the draconian image a “sanctions” based rule might conjure up, the Category 3 rule may seem surprisingly lenient to some.  For example, absent extraordinary circumstances, the court would be prohibited from imposing any of the sanctions listed in Rule 37(b)(2) or from giving an adverse-inference instruction unless:

“the party’s failure to preserve discoverable information was willful or in bad faith and caused [substantial] prejudice in the litigation.”

The sanctions based approach would almost certainly have an impact on how parties handle upstream preservation related issues.  However, the key ingredients that will impact what kind of behavior this rule drives are the severity of the threatened sanction as well as the applicable standard.  For example, a party facing severe sanctions for conduct that is either negligent, willful or in bad faith is likely to take their preservation obligations seriously.  On the other hand, if the realm of possible sanctions is trivial, parties are less likely to take their preservation related obligations seriously.

Conclusion

The three rule approaches represent very early attempts at framing possible approaches to amending the FRCP.  If the Discovery Subcommittee chooses to recommend rule amendments following the September 9th mini-conference in Dallas, the proposed language is likely to be closer to final form and easier to assess than the current proposals.  I will continue to monitor the rule making discussion and provide commentary in future posts.  Stay tuned for my next post where former US Magistrate Judge Ron Hedges explains why he thinks the rule changes are unnecessary and why the current proposals might run afoul of the Rules Enabling Act.

We’ve devoted a number of posts to the topic of ECA, ranging from a quest to define the acronym, all the way to the cost savings benefits of the ECA approach.  And, while there seems to be relative unanimity around the beneficial aspects of ECA, there still seem to be a number of myths and misconceptions.  So, ala the Mythbusters, we’ll run these myths through the gauntlet to see which survive scrutiny.

Myth #1: ECA Is Only Valuable if Performed “Early”

Certainly, ECA is best leveraged and will be most valuable when performed at the outset of litigation.  As has been stated before, it has value on two primary fronts, the first being the ability to scope electronic discovery (both in terms of cost and timelines).  The next is the more traditional value proposition where ECA is used to get an understanding of the case facts to enable the strategic decision making process.

As such, there are scenarios where an ECA methodology would still generate value even if performed “later” in the mater.  For instance, with bifurcated, class action litigation initial discovery about the class may occur months before discovery on the merits.  In this instance using a later ECA approach would still make sense since discovery about the case facts may not have been possible earlier on.  Similarly, “late” ECA may still hold value when new parties or claims are added to an existing lawsuit, or when there’s a substantial change in case direction, data, or custodians.

Myth #2: ECA Is Only Performed With Technology

Sure, enterprise grade ECA products  are an important part of the mix, but the products won’t perform an ECA by themselves.  There’s just too much subjective decision making involved in the assessment process.   Therefore, the right people are critically important — not only in terms of experience performing this analytical work, but also in their ability to capably testify about the underlying decision making process.  It’s also important to be able to follow a repeatable and defensible processes to show that the “recipe” used was aligned with industry best practices and wasn’t ginned up for a particular engagement.

Myth #3: ECA Only Works With Large ESI Volumes

Yes, ECA methodologies makes a lot of sense for large, bet-the-company matters because even modest savings when processing, analyzing and reviewing terabytes will easily approach six to seven figures.  However, smaller matters will still benefit from better budgetary insights that facilitate informed matter management.  And, in a way there’s almost more benefit from being able to quickly evaluate (fight/settle) smaller suits since the transactional costs are so high relative to the amount in controversy.  In both scenarios it’s important to view objective case data to prepare for meet & confer conferences.

Myth #4: Clients Don’t Want To Pay for ECAs

Many end clients (corporate counsel typically) have a similar litigation mindset:  i.e., the desire to avoid costs for as long as possible.  While avoiding early costs makes some sense on its face, the fact is that spending a small amount of money early on (for budgetary and case assessment purposes) will in most instances reduce the overall litigation budget.  It’s the classic, “you can pay me now, or pay me later” situation.

Counsel must understand that while some costs are incurred early in the process the benefits are crystal clear: i.e., determining customized case strategies early in the matter to decide whether to fight or settle.  Similarly, corporate clients must recognize that the benefits outweigh the costs and require their litigation counsel to include this process in every significant matter.

This illustration highlights how an initial ECA investment actually pays for itself over the life of the litigation.

Myth #5: ECAs Begin when the Complaint is Filed

Many newbie ECA practitioners may think that the timing for an ECA approach would start when the complaint is filed.  And, while this isn’t patently ridiculous, I think the better approach is to begin the clock at the time litigation becomes “reasonably likely” — versus later dates such as when the complaint is filed or when discovery is propounded.  This trigger is also the same for trigger preservation obligations and a host of interrelated activities such as ESI “identification,” which makes the matter kick-off more synchronized.

For more information about ECA, watch a recording of our recent webinar — E-Discovery MythBusters: Debunking Common Myths About Early Case Assessment.